Comps decreased 0.7%, but better than analyst's expectations

CAMP HILL, Pa. — Rite Aid unveiled what it called its "next generation" Wellness store as the chain reported a decrease in same-store sales Thursday.

The store, in Lemoyne, Pa., is less than a mile from the 4,639-store chain's Camp Hill, Pa., headquarters. A ribbon-cutting Thursday morning marked the store's grand opening.

"We know our customers' health and wellness needs are always changing," Rite Aid COO Ken Martindale said. "As such, it's important that we change with them and are able to evolve and innovate across all areas of our operations. Here in Lemoyne, we've taken our successful Wellness store format to the next level, which we think will help us continue to be the pharmacy of choice when it comes to health and wellness information, products and services."

Rite Aid said customers would immediately notice the new look of the store, with its wood-grain paneling on the outside that the company said would add a warm and welcoming feel as they approach it. The paneling also lists features like the GNC department, 24-hour pharmacy and drive-through services.

Inside, new features include a Diabetic Diagnostic Center, a one-stop shop for diabetics and their caregivers; a Vision Center, an easy-to-use kiosk that allows customers to conveniently order glasses and contact lenses and try on new frames; an expanded Men's Grooming section that allows customers to use a an iPad to sample a new look; a nail bar that showcases various top brands and the latest colors; a hair-care aisle with hands-on displays where customers can see and feel items before purchase; and a grab-and-go cooler with milk, eggs and other items.

Overall, the store features a softer layout designed to make it easy for customers to find what they're looking for, with new signage and decor that includes ceiling rings clearly designating each section; lighting fixtures and brand headers across the beauty department; and a relaxing, warm color palette with wood tones and softer lighting.

Along with Wellness Ambassadors, the pharmacy department features an "eye-catching" look that emphasizes the "wellness" theme of the chain's marketing, as well as a wooden path that leads directly to it. The company has cleared the department of all merchandise to create a more open and welcoming environment. Nearby are the GNC section and a newly designated smoking cessation department.

For the month of September, the chain's comps decreased by 0.7% compared with September 2011, including a 2.8% increase in front-end same-store sales and a 2.3% decrease in pharmacy same-store sales, heavily affected by new introductions of generic drugs. Same-store prescription count increased by 4.4%.

Total store sales for the month decreased 1.5% to about $1.9 billion, from $1.93 billion in September 2011.

Over the past 30 weeks, comps have increased by 0.9% over the same period in 2011. This included a 2.1% increase in front-end same-store sales and a 0.4% increase in pharmacy same-store sales. Same-store prescription count increased by 3.6%.

Total sales for the 30-week period increased by 0.2% to $14.54 billion, compared with $14.51 billion during the first 30 weeks of 2011.

Calling the results "better than expected," Guggenheim Partners analyst John Heinbockel wrote that the decline in overall comps was lower than his 0.9% estimate, while front-end comps rose more than his 2.5% estimate and pharmacy comps declined less than his 2.5% estimate. Heinbockel also expected the windfall from the now-ended Walgreens-Express Scripts impasse to last for several more months. He also expected the maturation of the Wellness+ loyalty card program to drive "above-trend" growth in EBITDA for another few quarters. "Better-than-expected September sales reinforce our thesis," Heinbockel wrote.

Comments

Feb 22, 2013 - 6:50 AM

HealthGMCD says

Sounds like a fresh approach to the stereotypical pharmacy. It`s about time as I believe the clinical white decor is predictable and will not set your store aside from all the others.

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